T-Mobile Kills Off the Wireless Contract

T-Mobile continues to rev up the changes it's got in store for customers

March 24, 2013

At CES 2013, T-Mobile and CEO John Legere played up the company's change in strategy.

(Credit:

Lori Grunin)

T-Mobile continues to rev up the changes it's got in store for customers.

The wireless carrier today seems to have finally done away entirely with contracts for wireless customers. This follows earlier moves that had allowed options including either a traditional two-year contract or no contract at all.

The shift is part of a broader transformation that CEO John Legere hinted at during his Consumer Electronics Show press conference in January, changes that are intended to make the carrier more competitive in the industry. As a distant fourth-place carrier among the national players, the company has been willing to demonstrate more aggressiveness in turning around its subscriber losses.

What's new today? T-Mobile's Web site now shows, for instance, that a customer could select an unlimited talk, text, and Web option that includes up to 500MB of high-speed data for a single phone for $50 a month. The price rises as the data level increases -- 2GB for $60, 4GB for $70, and so on.

The rate does not include the additional fee you pay for your phone. Instead of a subsidy, you pay a small fee on top of your phone bill each month to pay off your smartphone. But unlike the higher monthly fees you would normally pay a carrier under a contract, the fees stop once you pay off the phone.

Still, that means an additional fee for what would have been the life of a two-year contract. The Samsung Galaxy S3, for instance, would cost an extra $20 a month for 24 months, in addition to $109.99 up front. A lower-end Galaxy S2 will cost nothing up front, but would require a $16 fee on top of your phone bill for 24 months. Customers can opt to pay the full price instead. The Galaxy S3 costs $549.99.

T-Mobile has slowly shifted its focus to the so-called prepaid option as those plans have proven to be more popular for the carrier than the traditional contract model. The carrier has consistently bled contract customers over the last few years, with some switching to prepaid, but others leaving for the larger competitors. During CES, T-Mobile announced it would offer its no-strings unlimited data plan without a contract, a sign of today's broader move.

T-Mobile has a press event planned for this Tuesday, March 26, at which it will likely have more to say about its plan to be a wireless company that "doesn't act like one anymore."

The company is also expected to provide an update on its 4G LTE rollout plans. For now, it is the only national carrier to lack a 4G LTE option. So far, it has argued that its HSPA+ network -- which it calls 4G -- is fast enough, and reaches more people than some of its competitors' LTE networks. The BlackBerry Z10 launch, slated on Tuesday, is supposed to coincide with the launch of 4G LTE.

The 4G LTE announcements should address one of the knocks on T-Mobile's service. The carrier is also expected to eventually offer the iPhone, which would quell the complaint that T-Mobile lacks all of the marquee smartphones that its competitors offer.

The carrier's shift toward life in the prepaid lane is also moving forward on the business side, as its planned merger with MetroPCS last week cleared its final regulatory hurdle and now awaits just shareholder approval.